Strings are very far away from the last frets on the neck...

Sometimes the truss rod (nut you are referring to) will do the trick. The truss rod runs under the fingerboard and allows you to give the neck relief or tension. Some truss rods are dual action but I'm guessing yours is designed simply to give basic relief of the neck. I would make sure the truss rod is adjusted properly before sanding down the saddle. If you sight down the neck you should be able to see the relief in the neck - just use the string as your straight-edge. Most guitars need a slight amount of relief but higher-end guitars can be almost straight (better fretwork.) Once the neck has been adjusted correctly you can move forward with the setup.

Make sure the nut is also the proper height. If the nut is too low (1mm height between bottom of string and first fret) you should get it replaced by someone capable of doing such a thing. If the nut height is okay I would suggest moving forward cautiously by sanding the bottom of the saddle. Make sure this is done patiently and carefully as it can drastically change the sound and playability of the guitar. Hardly any material needs to be taken off to lower the action just a little. Error on the side of not-enough than too much. Make sure the bottom of the saddle remains flat! If the bottom isn't flat the guitar can sound horrible and if there is an undersaddle pickup it might not pick up evenly. The easiest way to do so is to tape some sandpaper rough side up on a flat surface (just don't pick something like mom's heirloom or something important in case it gets scratched.

If you'd like more detail check out http://www.fretnotguitarrepair.com/Repairs2.htm

Good Luck!

I am trying to id my guitar body, it look like a Fender stratocaster and has no neck, in the neck pocket it has stamped F.P.S 1 MAY 2010 29541350 do you know what F.P.S stands for i have to try and track a neck down for this guitar hence i have no seriel number